COLORADO SPRINGS, COLO. — Consumer interest in sustainability is and will remain keen in the coming years, said James Knutzon, vice-president, food and agriculture, of SCS Global Services, Denver. At the same time, businesses need a different thought process to successfully understand and embrace sustainability, he said.
The various facets of sustainability were discussed by Mr. Knutzon Oct. 19 at the annual meeting of the North American Millers’ Association at the Broadmoor in Colorado Springs.
Setting the stage for his presentation, Mr. Knutzon described three pillars of sustainability: economic viability; socially supportive (around the lives of growers, their families and their communities); and ecological soundness (preserving the resource base the world relies upon).
“What this really means for a business person is, if I’m going to take on sustainability as part of managing my business, that includes things that haven’t been included in a P.&L. before,” he said. “It requires a mindset that you’re trying to predict the future. That’s not easy. You can look at the past, but if sustainability is delivering those values that definition describes, you have to have in your mind what’s next down the road.”
Altered mindset required
He warned that sustainability is more of a moving target than an end point or destination.
“In today’s world that is rapidly changing, it’s rapidly changing in agriculture, you have to have a mindset of what might be best practices today may not be best practices tomorrow,” Mr. Knutzon said. “The more you learn, the more you understand the need to change things. The environment you will operate in is changing at a rapid rate.”
Labels as growth indicator
Describing food labels as an indicator of consumer wishes, Mr. Knutzon said labels offer considerable evidence that consumers care about sustainability. Sales of products with conventional labels are flat to down slightly while food and beverages with clean label or labels touting an absence of artificial ingredients are growing slightly.
“Sustainability claims are the fastest growing claims in the marketplace,” he said.
Asked whether they agree that “it is extremely or very important for companies to implement programs that improve the environment,” consumer interest is there, Mr. Knutzon said.
“All age cohorts agreed with this, but the figures were especially high for millennials and Gen Z,” he said. “Consumer research says going forward, the same will be true. All statistics point to the same outcome. Sustainable products will drive growth going forward.”
Increasingly, sustainability refers to environmental and ethical issues, Mr. Knutzon said.
According to a study conducted by SCS, a wide range of agricultural issues fall under the umbrella of sustainability, Mr. Knutzon said. These include pest management, soil and water, ecosystems, food safety, farmer worker health and safety, and non-bioengineered grains.
“That tells me the interest levels encompasses not just some aspects of production agriculture but a great scope of production agriculture,” he said.
Transparency across all aspects of the supply chain has become an issue of increasing importance, one in which the bar for accountability is rising, Mr. Knutzon said.
“In the past, you could answer the question with — ‘that’s not my actions’ (that caused the problem),” Mr. Knutzon said. “Now, when you’re in a supply chain, you’re also responsible for what happened before you.”
As a plus for millers, consumers appear willing to pay more for sustainably-produced products. Mr. Knutzon acknowledged that milling is a “small margin business.”
“If you’re going to invest energy, time and other resources into anything, someone will ask the question ‘Will I be rewarded?’ because part of sustainability is the economic sustainability of the company,” he said. “At least on a survey, it became evident people are willing to pay for it.”
A number of options are open for demonstrating sustainability, including certification and verification, Mr. Knutzon said.
“The objective is to try to establish certainty about what has occurred in the past or is occurring in the present,” he said.
Challenge with growers
Changing the mindset of growers may be a challenge, Mr. Knutzon said.
“I never met a farmer who, when you asked whether they are sustainable, didn’t answer ‘yes,’’’ he said. “They believe that to be the case.”
When studying reality, though, Mr. Knutzon discovered a 40% variance among growers between the best and the worst in terms of water efficiency.
“If you want to improve, you really need to understand what it is you are trying to improve,” he said. “The only way to do that is through metrics.”